Startup Conversations: Auk Industries

Over the past 20 years, we’ve seen great technological evolution, significant among them are the industrial Internet of Things, such innovations became envisaged solutions to new challenges and possibilities. One organisation that decided to tap into such innovations is Auk Industries. Producing hardware akin to ‘Fitbit-for-machine’ and cloud-based ‘Ops-analytics-in-the-box’, Auk Industries provides Industrial IoT systems (IIoT). Essentially, IIoT refers to the interrelated, automated use of machines, devices, and sensors that run industrial applications. Focusing on big data and machine learning, IIoT enables industries to run more efficiently and reliably in their operations process, as well as a reduced reliance on human-to-machine interaction.

The story behind Auk Industries

Prior to the establishment of Auk Industries in 2016, co-founder founder, Samuel Tan, had many years of experience in Operations. He expressed that in the years he had worked in GE’s Ops Leadership program and at McKinsey as an Ops consultant, it was a real pain as many industrial organisations have indicated that digital transformations are one of their top strategic objectives, yet only a small amount are making headway. Such organisations are often stalled by complexities, costs and they were in search of a product which was lightweight and scalable. This is where the idea behind Auk Industries’ product came to life, applying the idea of wearable for humans to build a ‘Fitbit-for-machine’, to solve a problem that Samuel was facing himself during his times as an operations consultant. By tracking ‘steps’, ‘heart-rate’ and ‘sleep patterns’ of industrial machines, Auk’s ops analytics engine ingests data stream from hundreds of workstations in a manufacturing plant to identify bottlenecks and distil the most important business decisions to make a huge bottom-line gain.

Boasting three key points on their products, Auk Industries hopes for current and future clients to remember 3 key things about their products (1) Fitbit-for-machine, (2) Deep data and (3) Feather-light IoT. Auks are a type of Arctic seabird. Their wings are a perfect balance between the best possible design for diving and the minimum viable for flight. “At Auk Industries, we share the same spirit. By deploying our light-weight Industrial IoT systems, our clients can dive 100 metres deep into machine data analytics, whilst maintaining a 1,000 feet high overview of the entire operations.”

A story that stuck with Samuel came from a factory owner in Indonesia. He had asked Samuel why his factory workers would save so hard to purchase an iPhone and went on to explain that they could never afford the big houses and cars of millionaires, but the same phone that even Elon Musk uses was within their reach. Upon recalling such an encounter, Samuel realised that the factory owner was right. “I realised technology was indeed a powerful equaliser. In the past, less well off families could not afford Britannica encyclopedias, but Wikipedia is now a service that is accessible to all. Disruptive technologies level fields for big or small players alike. I like to think the ‘Fitbit-for-machine’ that Auk Industries build us similar. Presently, digitisation, IIoT systems, and real-time ops analytics are no longer within reach of only the large conglomerates. Industrial companies big or small can deploy our same powerful product!”

It is far easier to “move” a business that is already moving than it is to get the business moving from rest. If one were to rephrase this, the first customer acquired is almost always not a smooth sailing task. Samuel recalls his team’s experience with their first real client, going so far as to describe it as a wild ride. “It was a water bottling plant which we visited for the first time across the straits with a few industrial IoT prototype kits in the car boot. The plant management brought us on a shop tour and was keen to give IIoT a try. However, as we needed to power down the machines to deploy safely, they only gave us 30 minutes during lunch! By the time the bell rang, marking the end of lunch, we were pretty proud of our work. Two full production lines were streaming data in real-time to the cloud analytics dashboard! The customer was pleased and they swiftly linked Auk to two other companies for introductions!”. Recalling such a detailed experience truly indicated how great of a milestone the first customer is for tech start-ups, they are often difficult to achieve but definitely worth celebrating.

Obstacles

Such celebrations, however, did not come easy. During Auk Industries’ initial stages as a new tech start-up, Samuel revealed that they started out of a garage home office, describing him and his team to be amazing bootstrappers. Most of their furniture was free of charge from McKinsey or other offices when they shifted. Despite the lack of funds to afford such materials, the silver lining of such an experience trained him and his team to be resourceful and even went insofar as to develop strict financial discipline. “Within months after PoC and small capital investment, we were fortunate to push both IIoT hardware devices and cloud enterprise software to commercialisation! In fact, we began to become cash flow positive within a year, but we had to be frugal, constantly reinvesting profit margins, and teetering on the edge of profitability and liquidation.”

Experiencing both highs and lows, Samuel went on to reveal that one of the most painful points of his team’s endeavours involved product mismatching. “Sometimes, we lose track, over-think customers’ needs and end up over-engineering. Detours like these burn away huge engineering resources and are very distracting for the sales team who try to sell features that customers may not want.” Growing from this experience, Samuel and his team decided to adopt a different approach in developing their products, where they would listen intently to their customers, support them closely and ensure that before they build each feature, their product will help in acquiring new customers and meet the expectations of their existing clients.

Solutions going forward and funding received

Within months of commercialisation, Auk Industries became cash-flow positive and realised they had reached a crossroad. They must now decide between continuing to bootstrap organically or raise venture funding to accelerate growth. After weighing options carefully, investors at AngelCentral became the natural choice! Samuel construed the likeness of startup funding to that of aircraft propulsion. “There are 3 key types of engines: Propeller, Jet, and Turbofan. Propeller planes are like bootstrappers with organic growth and low burn. Fighter jets are extremely well-funded centaurs/unicorns with aggressive vertical acceleration but incur high burn rates and often required frequent mid-air refuels. At Auk Industries, we strive for a balance analogous to Turbofans which are essentially 70% propeller and 30% jet. The jet drive provided by AngelCentral’s syndication round has accelerated our market salesforce expansion and helped parallelised product development.’‘

With AngelCentral’s help in acquiring sufficient funding, Auk Industries was able to invest deeper in the long enterprise sales cycle, build up hardware inventory to increase availability and also bed on both short and long-term product development and strategies.

2020 going forward

As 2020 marks the start of a new decade, Samuel had some words of advice for future generations of aspiring start-founders who plan to enter the IoT industry: “IoT is easy to ‘hello world’, but difficult to perfect, make robust and maintain top security. Industrial IoT is definitely even more challenging. However, the good thing about a B2B enterprise, particularly industrial businesses, is that it is for the long haul. There is a saying “if you want to go fast, go alone. If you want to go far, go together”. A start-up founder in IoT and/or industrial space must surely go far. Enterprise sales too will likely require stamina and sophistication more demanding that for consumer ware. So be sure to find good partners!”.